Bitcoin Dips as President Trump Blasts Fed’s Call for More Stimulus

Economic Stimulus: Choosing the Lesser of Two Evils. Powell told the National Association for Business Economics (NABE) on Tuesday that the risk of “ …

Key Takeaways

  • The Chairman of the Federal Reserve Jerome Powell called for continued aggressive fiscal policies and more monetary stimulus.
  • The Managing Director of the IMF holds similar views on providing more stimulus.
  • But, President Donald Trump has tweeted against the Fed’s policies, causing a dump in the stock market and Bitcoin prices.

Share this article

President Trump shot down Chairman Powell’s calls to add more stimulus to the economy. Markets, including Bitcoin, have since dumped following the clash.

Economic Stimulus: Choosing the Lesser of Two Evils

Powell told the National Association for Business Economics (NABE) on Tuesday that the risk of “overdoing it seems smaller” than pausing the stimulus.

The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, also gave an online speech to the London School of Economics, which echoes Powell’s views. She said:

“We are very clear in the message we are communicating to not withdraw support prematurely. If we do so, then we risk massive bankruptcies and massive unemployment.”

Although the American GDP is likely to rebound after its 31% plunge during the second quarter, Powell said recovery still has “a long way to go.” Indeed, both organization heads believe that holding off the stimulus now can lead to worse outcomes than the last quarter.

This is because any economic progress made this year has all been thanks to previous stimulus efforts. The national U.S. debt has now surpassed $27 trillion, and the Federal Reserve has increased its asset by $3 trillion since March 2020, a whopping 75% increase.

Trump Goes Against the Federal Reserve

While the Fed Chairman’s initial announcement received muted reactions from gold and Bitcoin traders, President Trump’s follow-up tweet later in the afternoon caused a drop in the stock market.

Phemex - 10 offPhemex - 10 off

Trump plans to put the talks of stimulus on hold for “until after the elections.” Trump added:

“I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major stimulus bill that focuses on hardworking Americans and small business.”

The S&P 500 index broke below the $3,395 to test lows of $3,354 in the hour following Trump’s tweet.

Would you look at that. Bitcoin selling off alongside the stock market on that last tweet from @realDonaldTrump.

I guess crypto does care about fiscal stimulus. #NoMoreBrrrrrrrrrrpic.twitter.com/cJyiJ0LSzT

— Mati Greenspan (tweets ≠ financial advice) (@MatiGreenspan) October 6, 2020

Bitcoin also dropped by 1.7% to lows of $10,525, whereas gold fell from the $1,900 per ounce level to test lows of $1,887 per ounce. The greenback also continues to trade at the lows.

The VIX index, an indicator of expected volatility in the market, rose 5.44% to trade at $29.5. The index rises as a function of perceived uncertainty in the market. In 2020, it has become an oft-referenced metric.

As mentioned earlier, the U.S. election and lingering fears of a resurgence in new cases of COVID-19 are already weighing down on the economy.

Today is a reminder that $VIX ⬆️ = $BTC⬇️

The election is just a month away. Expect more moves like this.

Trump is using the index as a lever.

— Cantering Clark (@CanteringClark) October 7, 2020

The emerging rift between the government and its central bank only adds to this confusion.

Share this article

The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

See full terms and conditions.

Recommended News

Bitcoin Bulls Bet on BTC Reaching $36,000 by Christmas

Markets Sep. 14, 2020
Bitcoin options traders have been aggressively buying call options at exorbitantly high prices. Leading crypto derivatives exchange Deribit saw 752, 462, and 230 contracts bought on Sept. 13 at strike…

Bitcoin Once Again Proves It’s a Risk Asset, Not a Safe Haven

Analysis Oct. 2, 2020
The price of Bitcoin reacted negatively to news of President Trump contracting Coronavirus while gold witnessed a small rally. Gold is still the leading safe-haven asset by a mile with…

Understanding Position Sizing

SponsoredPhemex
Let’s briefly examine the most important aspect of any trading system, position sizing, or specifically how much we will bet on any one given trading idea.

Federal Reserve Cuts Rates to 0% as Bitcoin Follows Stocks

Markets Mar. 16, 2020
The Federal Reserve has cut its benchmark interest rate to zero in a bid to revive the American economy amidst growing Coronavirus fears. Meanwhile, Bitcoin is trading in lockstep with…